What to Do When Distributors Say Online Prices Are Cheaper Than Yours?

Seven or eight years ago, many distributors were already comparing prices with online retailers. They might see a store offering a special flash sale online, cheaper than their own purchase price, and would actually try to take advantage of it. They would bring items bought online, point to the price on the computer screen, and half-jokingly say to salespeople: "Look, I got this online for less than your wholesale price. Don't come around pressuring me to stock up all the time. If you don't lower your prices, I'll start buying online!"

At the end of 2015, JD.com's "New Channel Division" was all the rage. What is the new channel? It's about replacing existing channel distributors by directly supplying retail stores through online orders, commonly known as B2B. Many distributor stores, during this so-called B2B revolution, stirred up conflicts among the masses and between manufacturers and JD.com. As long as the price wars between offline and online channels didn't affect the retail market, distributors seemed quite happy to see it happen.

Speaking of B2B, JD.com wasn't the first to think of it. Alibaba's 1688 wholesale market started setting up its platform seven or eight years ago, but the B2B waters are deep, and that division has struggled and found itself in an awkward position. E-commerce's desire to compete with channel distributors and take over salespeople's jobs seems to have never stopped since its inception.

Today's distributors are hard to manage because "the world is flat." Distributors' product information, industry knowledge, and even marketing expertise and skills are not necessarily less than those of salespeople. If we say 123, distributors might respond with 456. They may know not less than you, but possibly more. Today's distributor management needs to shift from relying solely on the quantity of information to leveraging the quality of information.

What is information quality? It includes two parts: one is the depth of key information. Distributors can only see the first layer, but you can see the second and third layers. If distributors say e-commerce has high traffic, you can tell them where that traffic comes from, what channels ordinary e-commerce can use to get traffic, and what the cost of acquiring that traffic is. The other is the limiting conditions of information. Everything happens under certain conditions, including the low prices distributors see online.

When distributors say online products are cheaper than yours, they might mean retail prices online are cheaper, or that wholesale platforms like 1688 offer cheaper prices. Currently, e-commerce is mainly about price cutting, and it's an indisputable fact that prices are lower. When distributors say, "Online prices are lower than your wholesale price, I'll buy online from now on," and they show you their computer with evidence from Taobao, how should salespeople respond?

Distributors compare your prices with others because price might be the only comparable factor. At its core, it reflects dissatisfaction with the value-added services you provide, or the lack thereof. For general home furnishing, building materials, and even durable appliances, is the transaction between manufacturers, channel distributors, and retailers just a simple buy-sell action? In the past, it might have been, but in the future, it cannot be. Manufacturers and channel distributors must continuously provide value-added services to shift distributors' focus from simple price comparison to value comparison.

So, to truly convince distributors when they question online vs. offline prices, you need to address two aspects: one is information quality—what information distributors have misinterpreted; the other is value-added services—distributors don't just need a transaction.

"Mr. Zhao, you can't buy from online!" Xiao Li always gets straight to the point.

"Are you kidding? Why not?" Old Zhao looked like he thought Xiao Li was underestimating him.

"These flash sale products online are limited to one per ID. How can you buy in bulk?" Xiao Li said calmly.

"I can just create multiple accounts!" Old Zhao said confidently.

"Even if you could get the goods online, you still can't buy from online!"

"Tell me why?" Old Zhao was now curious, not in a hurry.

Xiao Li continued calmly: "Are you buying these products for yourself or to sell?"

"With so many, how could I use them all? Of course, to sell!" Old Zhao didn't understand where Xiao Li was going.

"Online shopping usually has a 7-day return period, extended to 15 days. You're buying electronics. If you sell them to consumers a year later and they find quality issues, who do you turn to for resolution?" Xiao Li hit the key point.

Old Zhao grunted and didn't respond; he clearly hadn't thought that deeply.

"Even if you're willing to bear the after-sales burden, you still can't buy from online!" Xiao Li pressed on.

Old Zhao saw Xiao Li's intention and was less agitated: "I'm listening!"

"If you bring products from online to sell in your store, and the industry and commerce or quality inspection departments come to check the certificates of these products, what do you do? For example, where do you get the 3C certification for this batch?"

Old Zhao knew Xiao Li came prepared; it seemed he wasn't going to be scared off.

"Even if you can handle the local industry and commerce and quality inspection relationships, you still can't buy from online!" Xiao Li was just getting to the main point.

Old Zhao felt a thousand horses galloping through his heart.

"After you buy the goods, do you still need the company to provide sales training, community promotion training? Do you still need me to provide local project information, electrician resource introductions, and market order and price system maintenance? Do you still need channel distributors to provide credit periods, temporary stock transfers, and installation demonstration services and supporting services for new products?"

Xiao Li paused, then emphasized: "Not to mention, more importantly, are you currently paying full taxes? If the online platform supplies goods and issues invoices for every purchase, where do you find enough sales invoices to offset? So, at least for now, you can't buy from online!"

Old Zhao was a seasoned player and naturally knew what Xiao Li was referring to. After hearing this, would distributors still insist that online prices are cheaper and they'll buy online?

The advent of the internet era is a replacement of tools. When television appeared, radio almost disappeared, but with the increase in car owners, car radios have become extremely popular. Whether you're a manufacturer's salesperson, a channel distributor, or a retailer, as a tool, to survive better than others, you must continuously strengthen your own value, especially irreplaceable value, to keep up with the times and thrive.

The emergence of the B2B model now serves as a reminder to salespeople that the impact of the internet on offline channels has penetrated from the surface to the core. To navigate this trend, salespeople must start from two aspects: on one hand, truly understand the internet, learn about it deeply, and step back to see the bigger picture, so you can distinguish between major trends and deceptive tactics. On the other hand, find your own value, especially irreplaceable value. Even if it's just doing things solidly, solving problems one by one, it's more practically valuable than the old days of relying on wining and dining and talking nonsense.

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